What each pricing method actually promises the client
A fixed quote promises a number, not a time. Once it's accepted, that figure is what the client pays regardless of how the job itself unfolds. Consumer Affairs Victoria puts the underlying legal point plainly for tradespeople: once a price is agreed, "you have a contract with your customer, whether your agreement was verbal or in writing." The full mechanics of what that contract locks in are worked through on our quote vs estimate guide. An hourly rate promises the opposite: a rate per hour, with the final bill following however long the job actually takes to finish. Both are legitimate ways to price a job. What changes between them is who absorbs it when a job runs longer than planned.
Where the time risk actually lands
Materials cost the same regardless of which pricing method is on the invoice; a marked-up materials bill doesn't care how many hours the job takes. Labour is where the two methods diverge. Quote the job at a fixed price and the labour component is locked in at whatever hours were estimated. Run over that estimate and the extra hours go unpaid unless a variation is agreed with the client. Charge by the hour instead and every hour actually worked gets billed, so a longer job simply becomes a bigger invoice rather than a smaller margin.
Fixed quote vs hourly rate, side by side
The price mechanics differ in exactly one place: what happens once the job takes longer than planned.
| Aspect | Fixed quote | Hourly rate |
|---|---|---|
| Price stated to the client | One total, upfront | A rate per hour, final total known once the job's done |
| If the job runs longer than planned | Total stays the same unless a variation is agreed | Extra hours are billed and paid, same as any other hour |
| Who absorbs a time overrun | The trade, out of their own margin | The client, in the final invoice |
| Effective hourly rate if the job runs long | Drops below the rate the quote was built on | Stays exactly at the quoted rate |
The same overrun, priced two ways
Take our job quote calculator's own default job: $800 in materials at a 15% markup ($920) plus 8 hours' labour at $85 an hour ($680), a $1,600 subtotal, $1,760 once GST is added. Now say the job takes 12 hours instead of the 8 it was quoted on, four hours over, the kind of overrun a tricky access point or an unexpected repair causes on plenty of real jobs.
Quoted as a fixed price, the total stays $1,760 unless the client agrees to a variation for the extra time. The $680 labour component was meant to cover 8 hours; spread across the 12 hours actually worked, it comes to $56.67 an hour, well under the $85 rate the quote was built on. Billed hourly instead, the same 12 hours costs $1,020 in labour, pushing the subtotal to $1,940 and the GST-inclusive total to $2,134, a $374 gap against the fixed-quote total. The effective rate stays exactly $85 an hour, because every hour worked is an hour paid.
Neither method is wrong. A fixed quote can win a job a client wouldn't say yes to without knowing the total upfront, and padding the estimated hours to cover likely delays protects margin without ever touching a variation. Charging hourly protects the rate itself on every job, at the cost of asking a client to accept a number that isn't locked in until the work is finished. Both are versions of what business.gov.au calls cost-plus pricing: work out the real cost of doing the job, then add a margin on top, whether that margin sits inside a materials markup or inside the rate itself. Working out that rate means starting from the full cost of running the business and the hours actually billable in a year, drawing on the same cost components business.gov.au's hourly-pricing guidance lists: wages, superannuation, leave entitlements and tax.
Common questions
Does charging by the hour protect a tradie if a job runs over?
Yes. Every extra hour worked gets billed at the same rate, so the effective hourly rate doesn't move even if a job runs well past the original estimate. A fixed quote's total, by contrast, stays capped at the original figure unless the client agrees to a variation.
Why would a tradie choose a fixed quote instead of charging hourly?
A fixed quote gives the client a known total before the work starts, which can win a job a client wouldn't commit to on an open-ended hourly rate. Padding the estimated hours to cover likely delays protects the trade's margin without ever needing a variation.
Can a fixed quote go up if a job takes longer than expected?
Only with the client's agreement to a written variation. Otherwise the total stays capped at the figure originally quoted, and any extra time comes out of the trade's own margin.
Sources
Hourly-rate pricing method and the cost components it needs to include (wages, superannuation, leave entitlements, tax), quoted directly: business.gov.au, Choose a pricing strategy. Cost-plus pricing definition (work out the real cost, then add a margin), quoted directly: business.gov.au, Develop a pricing strategy. A quote forming a contract once accepted, quoted directly: Consumer Affairs Victoria, Giving quotes: tradespeople and small works. Quote-vs-estimate legal mechanics in full (variations, "not too much more"): this site's own quote vs estimate guide. Worked $1,760/8-hour job figures: this site's own job quote calculator. All fetched July 2026.